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CREDIT CARD HELP: The basic fundamentals of credit cards

Preventing and handling credit card debt

5 simple rules to prevent credit card debt

By Jeremy M. Simon

When it comes to deciding whether to use a credit card, the Consumer Credit Counseling Service of Central Florida has one simple consideration: whether you can manage your credit card properly.

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As the CEO of Consumer Credit Counseling Service of Central Florida and The Florida Gulf Coast Inc., a nonprofit group that helps consumers break free from debt, Richard Skaggs has seen a lot -- including individuals carrying as much as $200,000 in credit card debt.

Following just five easy steps, he says, can keep consumers from falling into the pit that is credit card debt:

1. Establish a budget and then follow that budget exactly.  In other words, don't be tempted to charge that plasma TV to your credit card on a whim when you haven't budgeted for it this month.

2. Carry a credit card balance for no longer than six months. Skaggs explains that beyond that point, the compounding of simple interest can produce a very expensive balance to pay off.  If it helps, think of your credit card balance as a snowball that grows larger as it rolls downhill.

3. Know what you're doing with reward credit cards. Holders of these can end up spending more than the reward itself is worth if they don't pay attention to the fees and interest associated with their credit card. 

4. Get a low interest credit card if your credit card's interest rate is excessive. The better your credit, the lower the rate for whichy you will qualify.

5. Be aware that balance transfer credit cards' teaser rates won't last forever. Six months is common now. The "normal" rate will return sooner than you think, so use that interest-free period to aggressively pay down balances.

Overall, Skaggs stresses the importance of consumers taking responsibility and managing their finances. 

Should credit card holders get in over their heads, many card issuers will work with customers who take the initiative to call with the goal of working out a payment plan.

CREDIT CARD HELP: The basic fundamentals of credit cards


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Credit Card Rate Report

Updated: 10-24-2014

National Average 15.07%
Low Interest 10.37%
Business 12.80%
Balance Transfer 12.82%
Student 13.14%
Cash Back 14.98%
Reward 15.05%
Airline 15.46%
Bad Credit 22.73%
Instant Approval 28.00%